Telenet shareholder Lucerne Capital questions capital strategy

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May 8 (Reuters) - Telenet Group Holding's minority owner Lucerne Capital Management said in a letter that it strongly questioned the Belgian media and telecommunications group's capital allocation strategy and its potential acquisition of Belgian cable company VOO.

"The current shareholder position and resulting corporate governance are long term unsustainable in our view and therefore we urge you to explore a take out of the minority shareholders or a scenario to position Telenet as an independent company governed at arms' length from Liberty Global", Lucerne said in the letter seen by Reuters.

Liberty Global is a majority owner in Telenet owning about 56.4 per cent in the company. It was not immediately available to comment on Telenet's letter.

Telenet's total shareholder return has declined from 25 percent under previous management to 4 percent under the current CEO and there is a conflict of interest between minority holders and Liberty Global in terms of cash flow leakage to minority holders, Lucerne said in a presentation seen by Reuters.

In February, Telenet and Nethys signed a five-year partnership agreement to deliver Voomobile offering.

"If Telenet is not able to allocate incremental capital at attractive returns, the company should lower capex to boost", Lucerne said in the presentation.

Cable and mobile operators across Europe are joining forces to offer TV, mobile and internet services as one big bundle, which makes customers less likely to switch. (Reporting by Mekhla Raina in Bengaluru Editing by Hugh Lawson)